What you don’t know about credit inquires can destroy your credit score and affect what you can qualify for. Whether you are shopping for a cell phone, car, home loan, insurance, or just curious about wanting to see what you could qualify for, a credit inquiry can cost you points on your credit score. Even a reduction in credit points may seem trivial. A change in credit points over a 30 year period can cost 1000’s if not 10,000’s dollars in higher interest payments.
Furthermore, to some, it can mean the difference of being able to qualify for a home, car, or other financings that is necessary in today’s world. Usually, a credit inquiry will result in a less than a five-point reduction in your credit score. However, with multiple inquiries comes the likelihood that the score will plummet and the interest rates for purchases will go up. This will result in the consumer with a lower credit score to make higher payments for home, car, or other credit purchases.
Credit Score and Different Credit Inquiries
An inquiry for a specific purchase will have a freezing point for a 2 week period.
In other words, if you were shopping for a car you could have your credit pulled, (also called a credit report check or inquiry) at several car lots during a two-week period and it would only count as one inquiry. This type of inquiry usually results in a less than a five-point drop in the credit score. This is because the credit bureau considers all the credit inquiries done in the two week period for the same credit purchase to only affect the credit score once.
The second type of credit inquiry is when a person is attempting to obtain different types of credit that are not related.
The best examples of this are car financing inquiry and purchase of a cell phone. These two items are not related. When an inquiry is placed on the credit report check it will cause the score to go down. This results in the score going down twice because of the different types of credit inquiries. Applying for credit to see what you can get and trying for different types of credit can lower your score significantly enough not to qualify for credit purchases at all.
Another common credit inquiry is when a marketing company purchases a list from the credit bureau.
Then the company uses that targeted list to send out unsolicited pre-approved credit offers. These offers usually come by mail and this type of inquiry does not affect your score. The credit bureau’s theory is it would be unfair to penalize a person who hadn’t inquired about a credit purchase and had no control of receiving the unsolicited offer. Even though these offers do not affect your credit score they can be an annoyance. This type of offer can be used by potential thieves as a source for identity theft or credit fraud. For that reason, any unsolicited credit cards should not be thrown in the trash prior to shredding them completely.
Reviewing your own credit from credit bureau sources will not affect your credit score. Your credit request (for simply review) does not hurt your score. It is your right to know what is in your complete credit file. The information on these credit reports is identical to what a lender, underwriter, or creditor will see. However, the credit scores on these credit reports can vary because of the way credit bureaus interpret your score. When considering a purchase of a home or car it is always best to check with a professional in that field of financing. That expert can help you determine the score that is relevant to your purchase and which credit bureaus will be used.
Credit Score: What to Avoid?
Your credit score can be destroyed by simple credit inquiries. The way to avoid losing credit points is to have your loan approved for a car, home, or other credit purchase prior to going on a shopping spree. The difference in a credit score going down even 5 points could result in getting a less desirable interest rate, the credit lender requiring more down payment, or even denial of your desired loan.
Credit Inquiries are supposed to remain on your credit report check for up to two years. The fact is you may have to ask the credit bureaus/creditors to have them removed after their expiration. The below numbers are direct to the credit bureaus and will allow you to order your credit reports directly. Reviewing credit through these sources are the best as they won’t lower your score even when viewed often.
- Trans Union 1-866-887-2673
- Equifax 1-800-685-1111
- Experian 1-888-397-3742
Another good reason to review your credit report inquiries is to protect your credit from identity theft or credit fraud. By reviewing your credit you can see recent inquiries for credit purchases. Should you notice the names of unfamiliar creditors, it could be an early sign of identity theft or credit fraud. Simply call all three credit bureaus and have them place a fraud alert on your credit report check. This will stop most credit theft. Today credit fraud and identity theft are more prevalent than ever before. So, make sure to be more careful.
If you need help with your credit cards, Credit Repair Monster is here to help!